State National Companies (NASDAQ: SNC) and Heritage Insurance Holdings (NYSE:HRTG) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Dividends

State National Companies pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. Heritage Insurance Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 2.0%. State National Companies pays out 18.8% of its earnings in the form of a dividend. Heritage Insurance Holdings pays out 33.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a summary of current recommendations for State National Companies and Heritage Insurance Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
State National Companies 1 1 2 0 2.25
Heritage Insurance Holdings 0 0 3 0 3.00

State National Companies presently has a consensus price target of $35.00, indicating a potential upside of 67.62%. Heritage Insurance Holdings has a consensus price target of $16.33, indicating a potential upside of 35.66%. Given State National Companies’ higher possible upside, analysts clearly believe State National Companies is more favorable than Heritage Insurance Holdings.

Profitability

This table compares State National Companies and Heritage Insurance Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
State National Companies 22.98% 17.65% 1.80%
Heritage Insurance Holdings 6.85% 7.34% 2.53%

Earnings and Valuation

This table compares State National Companies and Heritage Insurance Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
State National Companies $235.57 million 3.74 $91.47 million $1.28 16.31
Heritage Insurance Holdings $408.34 million 0.86 $43.38 million $0.72 16.72

State National Companies has higher revenue, but lower earnings than Heritage Insurance Holdings. State National Companies is trading at a lower price-to-earnings ratio than Heritage Insurance Holdings, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

State National Companies has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Heritage Insurance Holdings has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Institutional & Insider Ownership

57.2% of State National Companies shares are held by institutional investors. Comparatively, 61.3% of Heritage Insurance Holdings shares are held by institutional investors. 34.8% of State National Companies shares are held by insiders. Comparatively, 16.1% of Heritage Insurance Holdings shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

State National Companies beats Heritage Insurance Holdings on 9 of the 16 factors compared between the two stocks.

About State National Companies

State National Companies, Inc. is a specialty provider of property and casualty insurance. The Company’s segments include Program Services, Lender Services and Corporate. In the Program Services segment, the Company operates an issuing carrier (fronting) business to provide insurance capacity access to the United States property and casualty insurance markets. In the Lender Services segment, the Company specializes in providing collateral protection insurance, which insures automobiles held as collateral for loans made by financial institutions. The Company writes its insurance business through its insurance company subsidiaries, which include State National Insurance Company, Inc. (SNIC), National Specialty Insurance Company (NSIC) and United Specialty Insurance Company (USIC). As of December 31, 2016, SNIC and NSIC were admitted carriers licensed to write property and casualty business in all 50 states and the District of Columbia. USIC is an admitted carrier in Delaware.

About Heritage Insurance Holdings

Heritage Insurance Holdings, Inc. (Heritage Insurance) is a property and casualty insurance holding company. The Company provides personal and commercial residential insurance. Through its subsidiary, Heritage Property & Casualty Insurance Company (Heritage P&C), it provides personal residential insurance for single-family homeowners and condominium owners, rental property insurance and commercial residential insurance in the state of Florida and North Carolina. The Company is vertically integrated and controls or manages all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. The Company’s primary products are personal and commercial residential insurance, which it offers only in Florida. As of December 31, 2016, it marketed and wrote personal lines voluntary policies through a network of approximately 1,900 independent agents. It had 150,998 voluntary personal residential policies as of December 31, 2016.

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